It's also interesting watching Alphabet buy back $100 billion of stock over the last two years, when the price was half what it is today, only to turn around and sell shares now at the higher price.
I know GAAP accounting won't recognize any capital gain on these treasury operations, but from an economic standpoint this financial judo creates a lot of value for existing shareholders.
It’s not easy to buy such a large tranche of shares at a fixed and fair price in a single transaction!
Both parties get something they want this transaction. Alphabet gets the Berkshire halo effect and a guaranteed buyer of $10 billion worth of equities, Berkshire gets a large tranche of equity at a price they believe is fair.
I think they view Alphabet as their next Apple, and a relatively safe place to ride out whatever happens with AI: Alphabet is fairly well positioned for the upturn or the downturn, especially now with this expanded warchest of cash.
It's also interesting watching Alphabet buy back $100 billion of stock over the last two years, when the price was half what it is today, only to turn around and sell shares now at the higher price.
I know GAAP accounting won't recognize any capital gain on these treasury operations, but from an economic standpoint this financial judo creates a lot of value for existing shareholders.
"Buy low, sell high" isn't exactly financial manipulation.
My first thought was my finance professor telling us that companies always raise with equity when they think their equity is overvalued.
You’d think Berkshire would be at least passingly aware of that principle, though.
It’s not easy to buy such a large tranche of shares at a fixed and fair price in a single transaction!
Both parties get something they want this transaction. Alphabet gets the Berkshire halo effect and a guaranteed buyer of $10 billion worth of equities, Berkshire gets a large tranche of equity at a price they believe is fair.
I think they view Alphabet as their next Apple, and a relatively safe place to ride out whatever happens with AI: Alphabet is fairly well positioned for the upturn or the downturn, especially now with this expanded warchest of cash.
Really? lol.
Tech firms should always have a buffer and never get too close to the optimal debt ratio.
I think they have learned a lot re. what happens if you are asleep at the wheel now.
> Really?
Yes. Their competition is deploying debt and Google has low leverage. They also have $100+ billion cash on their balance sheet.
> Tech firms should always have a buffer and never get too close to the optimal debt ratio
...why is this especially applicable to tech firms? (Or a tech firm like Google?)